Health care demand for consultation

Healthcare leaders have called for greater discussion on health policy in the lead-up to this weekend’s election as the federal government’s decision to strip $2.5 billion from pharmaceutical industry funding squeezes profit margins.

Sigma Pharmaceuticals
, which delivered its second profit warning this year in July, has been struggling, its generics business battling funding cuts to the sector.

Pressure is mounting on the Sigma board to make a call on the 55¢ a share bid from South Africa’s Aspen Pharmacare, received more than two months ago. Sources said a decision could come as early as this week.

Generic drug manufacturers and distributors such as Sigma and rival
Australian Pharmaceutical Industries
are among the biggest losers from budget funding cuts aimed at saving taxpayers $2.5 billion over the next five years.

Analysts have already downgraded their earnings forecasts for Sigma and API for 2011 because of the cuts.

“I think it’s absolutely on the record that the government’s proposed savings from pharmacy can only come through expense reduction or claw-back of discounts," API chief executive Stephen Roche said.

“Funding cuts create further uncertainty and destabilises the sector while everyone is trying to plan. There needs to be some involvement from stakeholders."

The generics industry is opposed to the government’s agreement with drug-making heavyweights such as Pfizer and AstraZeneca to save $1.9 billion at the expense of generic drug manufacturers, distributors and pharmacists, and blame the government for a lack of consultation before the decision.

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Coalition health spokesman Peter Dutton said the opposition backed the government’s agreement with Medicines Australia to save funds on pharmaceuticals which could be invested in health reform, but would wait for a Senate report before giving a final commitment.

“Regardless of the agreement [with Medicines Australia] the global trend is prices migrate towards the cost of production," UBS healthcare analyst Andrew Goodsall said. “The industry is still lacking discipline around terms of trade with pharmacists."

As a condition of its banks waiving the breach of debt covenants, Sigma has pledged to pare generous trading terms with customers.

Primary Health Care chief executive Edmund Bateman has also slammed several aspects of Labor’s health policy and said funding cuts in private health, increased co-payments, GP super clinics and the increasing number of nurse practitioners were undermining general practitioners.

Dr Bateman’s TV and radio blitz against the changes began last week. He said he had been contacted by more than 2000 GPs following a mailout to warn them that their take-home incomes would continue to shrink and workloads grow if Labor was re-elected.